Well WTH,

Another exceptional post!

My question is how is it even remotely possible that the people in charge of buying bonds for the bank did not know to lower the overall duration of their loan book as the FED was raising rates?
I know virtually nothing and I know that.

Jk


My limited understanding is that they were flooded with a ton of money during the pandemic and bought longer duration bonds. During that time interest rates got crazy low and they foolishly wanted to max rates and did so but going long on duration. The FED rate dropped to near zero for about a year (summer 2020 to summer 2021).

Certainly seems stupid to me since I sure thought it was abnormal and rates would rise but then again we had nearly 2 decades of declining interest rates where many people here kept sayings bond prices had to fall since rates couldn't go any lower and yet they did, until last March.

I don't work in that business but is it like others where some companies don't want to pay for talent so they end up with less skilled employees who are more interested in getting a bonus and ignore common sense and lack experience?